(Bloomberg) — SK Hynix Inc. posted record quarterly profit and revenue, reflecting strong demand for the memory chips used with Nvidia Corp. processors for artificial intelligence development.
The South Korean chipmaker revealed a better-than-projected operating profit of 7.03 trillion won ($5.1 billion) in the September quarter, after revenue almost doubled. And it projected mid- to high-teens growth in demand for DRAM and Nand flash memory chips in 2025, suggesting it expects a sustained recovery for the broader market.
The company’s shares climbed as much as 3.1% to a two-month high in Seoul. That took its gain this year to more than 40%, as the company widened its lead over Samsung Electronics Co. and Micron Technology Inc. in supplying the cutting-edge high-bandwidth memory that powers Nvidia’s AI accelerators.
SK Hynix affirmed Thursday it plans to begin supplying its top-of-the-line 12-layer HBM3E in the fourth quarter. That should help boost the proportion of HBM sales in overall memory revenue to 40% from 30%. Away from AI however, Hynix and its rivals are still grappling with the after-effects of a prolonged slump in the business of computing and smartphone memory.
SK Hynix Shares Rise on Record Profit, AI Demand: Street Wrap
“SK Hynix’s results show that it’s focusing on premium products when some legacy chip prices are falling,” said Greg Roh, an analyst with Hyundai Motor Securities Co. “That demonstrates the company has the technology and capability to focus on where it can make money.”
Earnings also got a boost from robust demand for enterprise solid-state drives, used in large companies’ data centers. They made up more than 60% of the firm’s Nand sales during the quarter.
One area executives warned about was the market for legacy products, or lower-end memory. Capacity is growing in that space because of increasing supply from Chinese rivals.
What Bloomberg Intelligence Says
SK Hynix’s sales could jump again in 4Q vs. a year earlier, after 3Q’s robust 94% growth. Operating profit in 4Q may further increase sequentially on surging demand for high bandwidth memory (HBM) chips, with improving average selling prices (ASPs), after 3Q ASP for both DRAM and NAND chips rose by about a mid-teens percent sequentially. DRAM-bit shipments in 4Q could be up by about a mid-single-digit percent sequentially, after 3Q’s slight drop. NAND-bit shipments in 4Q might rise by a low-teens percent from 3Q, after 3Q bit shipments climbed by a mid-teens percent from 2Q. Although non-AI demand might not be strong, profit could grow due to strong demand for its AI memory chips. One-time items were negligible in 3Q.
Sales in 3Q were 3% below consensus but operating profit was 2% above due to HBM.
– Masahiro Wakasugi, analyst
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The company aims to maintain its lead by reducing production of legacy chips earlier than planned, and accelerating a transition to more advanced processes. It expects demand for high-end, high-performance memory to rise in tandem with PCs and smartphones sporting AI features.
As for its sixth-generation HBM, HBM4, SK Hynix is on track to supply the chips to customers in the second half of 2025 as planned. Because of significant technical changes in developing the most cutting-edge HBM chips to date, it’s working closely with its foundry partners, an executive said.
SK Hynix has said its capital expenditure this year would likely top earlier plans, to keep pace with a boom in spending on AI hardware. On Thursday, it said capital spending should be in the mid- to -high 10 trillion won range in 2024, and higher in 2025.
The Icheon-based company has announced a slew of investment plans this year, including $3.87 billion to build an advanced packaging plant and research center for AI products in Indiana.
At home, it’s spending $14.6 billion building a new memory chip complex and proceeding with other domestic investments, including the government-backed Yongin Semiconductor Cluster project.
https://finance.yahoo.com/news/sk-hynix-posts-record-profit-230938108.html
